Income Tax Act 2025 Gets Presidential Approval, Set to Replace Six-Decade-Old Law from April 2026
India has taken a historic step in reforming its direct tax framework. President Droupadi Murmu has given her assent to the Income Tax Act, 2025, which will officially replace the Income Tax Act of 1961. This marks the most significant overhaul of the country’s taxation system in more than six decades, aiming to create a simpler, transparent, and compliance-friendly direct tax regime.
The central government notified the Act in the official Gazette on Friday, a day after the President’s approval. The new law, passed during the recently concluded Monsoon Session of Parliament, is seen as a milestone in India’s tax reforms.
A New Era in Taxation
The Income Tax Department announced the development on social media platform X, calling it a “historic reform.” The department wrote: “The Income Tax Act, 2025 received the assent of the Hon’ble President on August 21, 2025. Replacing the 1961 Act, this marks the beginning of a simplified, transparent, and compliance-friendly direct tax system.”
According to the government, the Act is designed to be more concise and accessible, eliminating outdated provisions and legal jargon that often created confusion among taxpayers.
When Will the New Act Come Into Effect?
The provisions of the Income Tax Act, 2025 will come into force on April 1, 2026. From this date, the 1961 Act—long criticized for its complexity—will officially be replaced.
The Finance Ministry emphasized that the reform is more than just a change in law; it is a major shift in how taxation will be understood and applied across the country. Officials highlighted that this update comes after more than six decades, making it one of the most comprehensive legal revisions in India’s fiscal history.
Key Features of the Income Tax Act, 2025
The new law aims to simplify India’s direct tax framework with the following changes:
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Reduced Number of Sections: The old Act contained 819 sections, while the new Act has streamlined this to 536 sections.
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Fewer Chapters: The number of chapters has been cut down from 47 to 23 chapters, making the law more compact and easier to navigate.
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Simplified Language: Legal jargon and archaic provisions have been removed, ensuring the document is more accessible for ordinary taxpayers.
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Clarity in Provisions: Redundant and overlapping clauses have been eliminated to reduce ambiguity and litigation.
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Compliance-Friendly Structure: The Act emphasizes digital integration, simplified reporting, and transparency, aiming to make tax compliance less burdensome.
Why This Reform Matters
The Income Tax Act, 1961, though comprehensive, had become overly complicated over time. With hundreds of amendments and multiple court interpretations over the decades, the law had turned into a lengthy and often confusing document. Tax experts often criticized it for being too technical, leaving ordinary taxpayers dependent on professionals for even simple compliance.
By introducing a shorter, clearer, and updated version, the government intends to make taxation more citizen-friendly. The reform is also expected to reduce disputes, improve voluntary compliance, and enhance ease of doing business in India.
A Landmark in India’s Tax Journey
This overhaul is not just about reducing the number of sections but about reshaping the philosophy of taxation in India. It underscores the government’s intent to modernize the tax system in line with current economic realities and technological advancements.
With a simpler and more transparent law in place, experts believe taxpayers will find it easier to understand their obligations and rights. At the same time, authorities expect improved efficiency in enforcement and monitoring.
✅ Takeaway: The Income Tax Act, 2025 represents the biggest reform in India’s direct tax laws in more than 60 years. Effective from April 1, 2026, the new law replaces the 1961 Act with a simplified, transparent, and compliance-friendly framework designed to benefit both taxpayers and the government.
